But Kilroy doesn’t have a countywide presence. It focuses on North County coastal markets in an appeal to high-tech companies and those that service them and stays out of San Diego’s central business district downtown and the South Bay.

Still, Kilroy is going where many office builders aren’t — into mixed-use development in a 1.4 million-square-foot project called One Paseo that is drawing crowds of doubters at Carmel Valley planning group meetings.

Steve Scott, senior vice president for development in San Diego, said Kilroy’s new chairman, John Kilroy Jr., who succeeded his father, Jim Kilroy, earlier this year, believes in mixing residential, commercial, retail in one complex.

“We see mixed use as really the future development product of the company,” Scott said. “That doesn’t mean we won’t be doing corporate campuses or office-only stuff. It’ll be done in a balanced fashion.”

Jim Kilroy started the company in the 1940s, specializing in tiltup concrete and fast-track construction in the fast-growing, post-World War II Los Angeles area.

Sara Neff, the company’s vice president for sustainability, said Kilroy also pioneered the standard use of air conditioning in industrial buildings, telling tenants that cooler working conditions would boost productivity and reduce the need for an extra work shift.

However, Kilroy was not a player in San Diego through 50 years of booms and busts until 1997. That’s when the company went public and acquired 1 million square feet of eight office buildings held by the Allen Group for $650 million. With an additional $850 million spent on new construction since then, Kilroy now owns 61 buildings in 10 local submarkets.

“San Diego still generates 40 percent or so of the company’s net operating income (NOI),” Scott said, a figure that will decline as more building comes online in other West Coast markets. “From an investor perspective, that allows us to better weather changes in the marketplace.”

What is a Kilroy building?

From the outside, Scott concedes, Kilroy office buildings don’t differ markedly from those of other developers. They’re modern, sleek, well-maintained and landscaped, and sport prominent signage aimed at passing freeway traffic. There’s no architectural flourish or trademark feature that says “Kilroy is here.”

(“Kilroy was here” was a phrase popularized during World War II — soldiers would attach the phrase to a cartoon of a big-nosed gremlin peering over a fence. Who the original “Kilroy” was remains an urban legend.)

What’s inside is what counts, Scott and Neff say.

“We really design from the inside out,” Scott said.

Neff said that includes using state-of-the-art energy, water and heating/air-conditioning systems. Kilroy is upgrading its buildings to LEED-certified status under the U.S. Green Building Council’s Leadership in Energy and Environmental Design program.

So far, 16 percent of San Diego’s portfolio is LEED certified and 22 percent is certified as Energy Star, a U.S. Department of Energy rating system.

Weathering the recession

As with nearly all landlords, Kilroy suffered some tenant losses during the recession, when its occupancy rate fell from nearly 100 percent to 78 percent; it’s back up to 92 percent. More important, Scott said, Kilroy never overextended its finances. By keeping its debt ratio below 50 percent, it was able to withstand tenant bankruptcies and downsizing and to continue to improve its properties.

Now in expansion mode, Neff said Kilroy realizes younger workers are not satisfied with cubicles and water coolers. They crave basketball courts, healthy food service and access to public transport.

But if those workers would like to live, play and work in a Kilroy building in downtown’s vibrant urban center, Kilroy has nothing to offer.

Scott said in his 30 years in the office business, the urban revival in downtown San Diego has not translated into a strong upsurge in office demand. Most growth has gravitated from La Jolla north, fueled by high-tech companies concentrated around UC San Diego, Torrey Pines Mesa and Sorrento Valley.

“If you look at where the industry clusters are, none are downtown, outside of government,” he said.

Downtown as a high-tech hub is not a “lost cause,” he said, but it remains to be seen if startup tech companies in Centre City stay there as they grow.

One Paseo: new direction

Kilroy has listed 12 buildings for sale to generate cash for its next round of development of more office space. The first groundbreakings are expected by year’s end in Sorrento Mesa.

But the big breakout for Kilroy is One Paseo, a 1.4 million-square-foot, mixed-use development at El Camino Real and Del Mar Heights Road in Carmel Valley.

In addition to 484,000 square feet of office space that the company already has the right to build, Kilroy is proposing:

• 670,000 square feet, including 21,000 square feet of professional offices; and

• 670,000 square feet for 608 apartments or condos.

Residents wary

Scott said the company’s expanded vision for the property fits San Diego’s “City of Villages” approach to promoting infill rather than greenfield development as a way to minimize car trips by siting commercial, retail and residential development together.

However, many nearby residents express concern about potential traffic impacts. According to a report in the Del Mar Times, a city traffic study did not satisfy critics, who worried that the planned expansion at nearby Del Mar Highlands Town Center was not fully accounted for.

“We’re taking a look at the whole picture versus one isolated area,” said Frisco White, chairman of the Carmel Valley Community Planning Board.

Elizabeth Schreiber, vice president and general manger of the 32-acre, 88-tenant center opened in 1989, said her center could expand from its present 280,000 square feet to 450,000 square feet of retail under its present entitlements.

“Our concerns (with One Paseo) have always been focused on traffic, density, scale and parking,” Schreiber said. “We’re not in any way opposed to mixed use on the site across from us. We’re just concerned about traffic and engineering impacts on our property.”

City officials said approval of One Paseo’s environmental impact report, originally expected by now, has not yet been scheduled. Responses to issues raised in the draft EIR are in the works.

Scott, who hopes the City Council will act by the second quarter next year, said additional community benefits are being fashioned but would not detail what they might be.

So far, a synchronized traffic control system is planned, as are walking paths tying the project together with its neighbors, a bike concierge and electrical vehicle charging stations.

“It’ll be the most sustainable living, retail and office environment in Carmel Valley,” Scott said.